Buena Vista Hotel purchases Embassy Hotel with the intention of demolishing the Embassy Hotel and building a new high-rise hotel on the site. The cost of the Embassy Hotel should be:

written off as a loss when it is torn down.

capitalized as part of the cost of the new hotel.

capitalized as part of the cost of the land.

depreciated over the life of the new hotel structure.

The cost of permits and licenses are material to the entity for whom you are accounting. The cost of these items should be:

capitalized but not amortized.

charged against paid-in capital.

expensed over the useful life of the items.

expensed in the period acquired.

The Holstrum Corporation intends to acquire some plant assets from Bailey Corporation by issuing common stock in exchange. The cost of the assets should be measured by:

the market value of the stock.

the book value of the stock

Baileys carrying value of the assets

the par value of the stock.

A machine with an estimated service life of five years and an expected salvage value of $5,000 was purchased on January 1, 2014 for $50,000. The amount to be recorded for depreciation for 2014, 2015, and 2016, respectively, using the sum-of-the-years-digits method will be:

$15,000; $8,000; $4,400

$16,667; $13,333; $10,000.

$15,000; $12,000; $9,000.

$20,000; $12,000; $7,200